lines were derived

price standard and thus contribute to a better understanding of current living standards around the world. Adopting the 2017 PPPs also affects the derivation of the international poverty line. The global and regional poverty rates in this chapter use the new value of the international poverty line, US$2.15 (revised from the US$1.90 value used with the 2011 PPPs in previous editions of this report). Box 1.1 provides more information on the shift to the 2017 PPPs, and online annex 1B discusses in greater detail the changes in the global and regional poverty estimates stemming from adoption of the new international poverty line. The increase in the international poverty line from US$1.90 to US$2.15 primarily reflects the difference between 2017 and 2011 nominal dollar values. The change in the global poverty rate due to the change in poverty line is thus negligible. Extreme poverty decreases slightly, by 0.3 percentage point, to 8.4 percent, reducing the global count of the extreme poor by 20 million. The trends in global and regional

BOX 1.1 How the new international poverty lines were derived

In May 2020, the International Comparison Program (ICP) released new purchasing power parities (PPPs) based on price data collected in 176 economies in 2017 (World Bank 2020b). Poverty estimates are often updated with new PPP data to reflect new information on price differences across countries. Related statistics such as gross domestic product (GDP) are similarly updated with new PPPs. When switching to a different base year (in this case, 2017), two revisions are made. First, the consumption aggregate of each household is converted into dollars of the new base year using the new price information. Second, the poverty line used to assess whether a household is poor is also updated to the new base year. This box is an overview of the new poverty lines, and further details are available in Jolliffe et al. (2022).

What is the international poverty line?

The international poverty line is a standard that has been used to shape key policy actions on global poverty—see, for example, Sustainable Development Goal 1 (United Nations 2017). In 1990, the World Bank introduced the dollar-a-day poverty line and has since followed the approach of basing the international poverty line on the national poverty lines of some of the poorest countries in the world, expressed in PPPs (World Bank 1990). The global line has been revised each time the ICP has released a new round of PPPs—from US$1.00 (1985 PPP) to US$1.08 (1993 PPP) to US$1.25 (2005 PPP) to US$1.90 (2011 PPP).

The starting point of deriving the international poverty line and the higher absolute poverty lines is a new set of national poverty lines calculated around 2017 and converted to 2017 PPPs.a The international poverty line is derived as the median of the national poverty lines of low-income countries (LICs), while the higher absolute poverty lines are the median national poverty lines of lower-middle-income countries (LMICs) and upper-middle-income countries (UMICs). In 2011 PPPs, US$1.90 was the median for LICs, US$3.20 for LMICs, and US$5.50 for UMICs.b In 2017 PPPs, US$2.15 was the median national poverty line for LICs; US$3.65 was the median line for LMICs; and US$6.85 was the median for UMICs (see table B1.1.1). The change in the line for UMICs was relatively large, driven by an increase in the real value of national poverty lines in UMICs between 2011 and 2017.c One way to show this change in poverty lines is to express the US$1.90, US$3.20, and US$5.50 poverty lines in constant 2017 US dollars and observe real changes in their value between 2011 and 2017. Figure B1.1.1 illustrates the fact that the lower lines are virtually unchanged in real terms, whereas the UMIC line increases significantly, reflecting a real increase in the value of the line.

The selection of US$2.15 as the international poverty line is robust to several methodological choices, as Jolliffe et al. (2022) explain in detail. It is robust to using the method that underpinned

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